DIRECT FOREIGN INVESTMENTS ARE IN THE CONDITIONS OF WORLD ECONOMY RECESSION

Abstract

The article is devoted to the analysis of the inflow of foreign direct investment, which is taking place in the world today, in the recession of the world economy, due to COVID-19. The corona crisis led to a sharp decline in foreign direct investment to 2005 levels. It was found that developed countries suffered the most from the pandemic, where foreign direct investment fell by 58%. Equity investments and reinvested earnings of corporations decreased by 50%. The crisis has affected the most productive investments in industrial and infrastructure projects. In developing countries, direct investment fell by 8%. The decline in foreign investment in countries was uneven: in Latin America and the Caribbean, investment fell by 45%, in Africa by 16%, and in Asia by foreign direct investment by 4%. In countries with economies in transition, foreign investment fell by 58%. This was the largest decline among all regions of the world. Experts believe that the slowdown in economic growth in developed economies is having a negative impact on the economies of the rest of the world. In addition, the pandemic has exacerbated inequalities in the availability of vaccines, economic growth, access to education and health services, as well as unemployment and incomes, and has contributed to inflation and increased financial vulnerability in much of the world. This contributes to the growing risk of even deeper crises in national economies. However, according to IMF forecasts, global economic growth of 4.9% will take place in 2021. These are the highest rates of economic recovery since the recession in 80 years. The growth of key macroeconomic indicators will help revive the investment market and foreign direct investment on a global scale. The most important industries that attract foreign investors in 2021 include consumer goods production, agriculture, information and communication technologies and pharmaceuticals. Experts believe that lower production and investment growth will have a particularly negative impact on emerging market and developing countries. Therefore, countries need to implement fiscal measures and monetary policy and reform to address the effects of the pandemic.